Monthly Archives: April 2015

There is a valid reason for the immense popularity of home loans today- the loans facilitate you to not only fulfil your basic requirement of getting a home but additionally also avail of tax rebates on it. Taking a home loan automatically makes a person eligible for tax deductions under Section 80C and Section 24 of the Income tax regulations, so it’s a good saving whichever way you look at it. A dual advantage of sorts.
Here’s a look at some of the ways you can squeeze the most out of your home loan-

Rebates from the home loan

Purchasing a home is a momentous decision, however, it is fraught with niggling nuances and heavy down payments. Once you have crossed the initial hurdle of putting together the down payment, you will need to consider many other factors such as the lender, floating rate versus fixed rate, tenure and so on.

It is better to take guidance from trusted acquaintances or seek legal assistance regarding these matters. Those who have previously taken a home loan can be trusted to suggest a good lender and the recommended repayment tenure. Once these initial details are sorted out, you must ensure that the home you have planned to purchase comes from a reputed builder who delivers timely projects (deviation from this basic rule and you can stand to lose out considerably). Interest deductions are liable to be claimed starting from the year in which construction completes. So it’s best to choose your builder with utmost care.

There have been many instances of projects getting delayed and the brunt of this delay is borne by the end user; thankfully there are provisions to somewhat protect customers from this kind of a situation. You qualify for tax deductions for under construction properties, besides claiming deductions on interest for the financial years before completion of construction. You can sum up the entire pre-construction interest and claim it in five equal installments. However, there are ceiling limits on the deductions you can claim.

Another caveat here is that if you sell the house within five years of having taken possession, the deductions that you may have claimed on the principal amounts are reversed. The amount is treated as income in the year of sale and taxed according to the income accrued.

Existing home loan borrowers can claim deduction on the loan’s interest in every financial year up to a maximum amount of Rs. 2, 00,000. So, if the annual interest repayment is lesser than this amount, the deductions are limited to your annual interest.

At this juncture, it is important to understand that the monthly repayment installments comprises of two elements – the principal amount and the interest amount. Principal amount repayment in the EMI qualifies for deduction under Section 80C and the amounts paid towards stamp duty, registration and other expenses which are required for transfer of the house to the owner also qualify for tax exemption. The preconditions being that you must be a home owner on the said property and a borrower in the loan. There are ceiling limits to the amount of deductions you can claim on the collective amount of these payments.

Claiming deductions from the home loan in joint names

Many working couples find this to be a convenient option when applying for a joint home loan. However, the prerequisite clearly states that the house has to be purchased jointly and the house should be in their joint names. Secondly, the share of each applicant and owner must be clearly mentioned without any discrepancies in the percentage ownerships of the co-owners.

There are other benefits in a joint home loan, namely, the division takes place in the same proportion in which the asset is owned by each co-applicant, besides the tax benefits get divided among the co-applicants. The individual co-applicant is eligible for a maximum tax rebate of approximately Rs.1, 50, 000 in case of principal repayments. Even in case of the interest element the deductions are approximately Rs. 2 lakh.

Thrifty planning on the part of the joint owners will ensure that the applicants
enjoy maximum tax benefits and nothing in the repayment amounts is unduly lost. Additionally, do remember that applying for a home loan jointly also means that you are eligible for a higher loan amount. Besides, in some cases, registration fees are reduced if the property is owned by women either individually or jointly.

As a wise home buyer you should gauge the pros and cons and ensure due diligence before taking any financial decision.

A promising location with a massive investment potential !

Tambaram is often referred to as being one of the oldest localities in Chennai; however that’s not the only thing it is well-known for– Tambaram has emerged as one of the most preferred localities in Chennai for home buyers. Recent studies note that there was an increment in appreciation, nearly as high as 18 per cent in the last one year and 22 per cent in the last two years. Those who invested early enjoyed a handsome capital appreciation on their real estate investments in West Tambaram.

The demand and supply situation for housing is fairly well balanced and the infrastructure is well organised to take on an increasing demand. Keeping these considerations in mind, home buyers seem to be making a beeline to Tambaram and there is a plethora of incredible projects that have already been constructed or are in the pipeline. Tambaram has justly been hailed as one of the most important epicentres for commercial and residential activities in Chennai.

Reasons for the uptrend

Tambaram is located on the GST Road (Grand Southern Trunk) and serves as a midway to the IT and SEZ corridors. It is because of this strategic location that the area is teeming with a flurry of commercial and residential developments. Tambaram has well established industrial enterprises nearby and affords quick road connectivity to the neighbouring areas and to the rest of Chennai.

The area is in close proximity to the Chennai airport; it is a mere 10-11 kms away from West Tambaram through the GST Road. The railway station is
3.5 kms away from West Tambaram, besides it boasts of being one of the busiest railway terminals of the Chennai Suburban Railway Network. Being situated advantageously along the Chennai-Trichy Highway, Tambaram is approximately 27 kms away from the city centre and one can reach important landmarks quickly.

All these features have brought Tambaram in the limelight and it has gained favourable popularity among IT professionals, NRI’s and High Net worth Individuals (HNIs) for residential properties. Tambaram is dotted with many renowned colleges and schools such as Valluvar Gurukulam, Jain Vidhyalaya Matriculation and Higher Secondary School. Recreation is also in easy access with the Kishkintha Theme Park being located at the intersection of Darga Road and the Outer Ring Road.

Well Organised Infrastructure

The meteoric rise in demand for apartments in Tambaram has resulted in over 60% of total residential occupancy and it is easy to find properties that suit a wide range of needs, ranging from luxury apartments to mid-level housing.

Tambaram is separated into Tambaram East and Tambaram West with the main road through West Tambaram connecting the districts of Lakshmi Nagar, Krishna Nagar, Bharathi Nagar, Old Perungalathur, Madhana Puram and Mudichur, ending at the Vandaloor-Oragadam road. One will find that while both areas are doing well, West Tambaram has presented a more lucrative option because of the development of the Vandaloor-Nemilichery Outer Ring Road.

West Tambaram has shown to present an affordable option compared to its eastern counterparts and one can find that this area is more suited for those who prefer a relatively more peaceful and green environment. There is a police station as well as a fire station in West Tambaram and contribute to making this locality peaceful, safe and tranquil. The Tambaram Municipal Corporation has introduced several new local initiatives that have garnered support from the residents and have set an example for other municipalities to emulate.
Collectively, all these features make West Tambaram a modern day utopia in the making.

Your home will be your domain. Take a wise decision while buying your first one!

Its tough enough being a woman and dealing with all the feminine issues that are pelted by the world constantly. Add to that home buying hassles and you have quite a handful to deal with, isn’t it?

Our guide below will serve to steer you through the points that you must keep in mind before you can start off on the tedious yet exciting journey of owning your own home.

Taking a home loan? No worries, take it head on

All you independent, career oriented women who’ve zeroed in on a home and are planning for a home loan, here’s one big reason in big bold letters- You are eligible for ‘additional’ interest benefits. These benefits are specially extended to those belonging to the fairer gender.
Leading financial institutions and lenders have come up with schemes where women get the benefit of reduced interest rates as compared to the ongoing applicable interest rates of a home loan. It would be a good idea to enquire with different banks and compare their rates at the end of the day. Do remember that this is being done to promote ownership of property by women.

Budget your expenses and factor in the upfront payments

Women by nature are a thoughtful and more organised breed. So it would be hardly surprising that most women may have pre-planned their expenses and outgoings months in advance of taking a loan. However, do remember that down payments are usually a considerable amount of money and it may exceed your budgeted amount. Along with the down payment, there will be additional expenses such as government duties, electricity and water connection charges, stamp duty, registration or transfer fees, home insurance charges, service tax and other taxes too. Do bear in mind that these expenses may be nearly 6-7% of an additional cost on the total cost of the home.

Check the security features in advance

There’s nothing like being forewarned, especially if you are a single woman and are most likely to reside alone in the house. In today’s scenario it is imperative that you must consider your safety and security as prime aspects before finalising any project.

Smartphone enabled homes with built-in security features, CCTV cameras and round the clock security are just some of the things to watch out for. Remember to check the neighbourhood for any unsavoury activities and do keep a tab on the builders’ charges for all these safety features.

Don’t let the EMI’s catch you unawares

Grocery bills, daily expenses, utility bills, personal incidentals and a host of other things- these are all the components of regular monthly outgoings. Now you will be adding to this the additional load of a monthly instalment. If it still sounds good then perhaps it’s a good idea to go full steam ahead.

Chart out your instalments and the how’s and where’s associated with it. Think hard if you can really afford it. It is also vital that you must consider unforeseen, out of pocket expenses that may just crop up anytime.

Determine your loan eligibility by utilising the online loan eligibility calculator and understand the exact amount that you end up paying as instalment. Usually, your lender will share the details in advance, so you can plan for resources accordingly.

The thumb rule, though it differs from person to person, is that you must set aside about 60% of our income towards personal expenses and the rest should be allotted to payment of the instalment.

It’s a great idea to own your own home; in a way, it’s like marking your own territory. However, your home is not going to be your only financial anchor in life ahead, you will and should have other investments that will secure your future and support you in your sunset years.

While looking around for your first home, ensure that you don’t necessarily go in for the largest or the most posh project, rather opt for something which will appreciate nicely over the years and give you a handsome return should you ever sell.

Property approvals from the Directorate of Town and Country Planning (DTCP) and Chennai Municipal Development Authority (CMDA) are important and sacrosanct permissions the builder has to obtain before he can commence construction. Any anomalies in this and you can be sure that the project is going to be fraught with legal issues. Read up below and you will understand all you need to know about these approvals.

Procedure for CMDA approval

The CMDA is a designated body appointed for the sole purpose of regulating real estate developments in the Chennai Metropolitan Area through issue of Planning Permission (PP) under section 49 of the Tamil Nadu Town and Country Planning Act 1971.

The CMDA has entrusted powers to the local bodies within the Chennai Metropolitan Area to issue planning permission for ordinary buildings and buildings under normally permissible categories of industrial, residential, institutional and commercial use zones, sub-divisions and small layouts.
IT/ ITES, special and multi-storey buildings require direct permissions issued by CMDA.

The authority has set up guidelines for the execution of Planning Permission (PP) and the process is much easier now due to the streamlined procedure. It is prescribed that before a builder may commence development, it is mandatory for him to obtain PP from the CMDA. The permission is valid for
three years from the date of issue.

Permissions are granted to only those who conform to the land use for which the site has been designated under the Master Plan or the Detailed Development Plan. Once the builder has obtained approvals he must complete the project within the time prescribed in the planning permit. CMDA approvals are withheld if the CMDA finds some anomalies related to the land or deficiencies in statutory approvals.
Developers carrying out constructions without proper permissions are taken to task with the construction deemed as unauthorized. The end result of such a scenario being that either the constructions will be demolished, or there will be a stay order or it may even be sealed under the Act.

Procedure for DTCP approval

The Directorate of Town and Country Planning (DTCP) is responsible for carrying out developmental activities and to exercise control on the town planning for Chennai, its suburb and all the districts that come under its jurisdiction. The DTCP or CMDA approvals come with the clear explicit advantage of owning land that must be utilised for the purposes as defined by the planning authority; in other words it is the ease of getting approval from DTCP or CMDA for the right to build lawfully and legally. Once the builder has an approval for the said land, the building cannot be demolished, unless there are some unapproved layouts later on. A DTCP approved layout will follow the guidelines with regard to the road width or public spaces.

There are no specific size requirements of the property to get DTCP approval, however the land should be within the limit of DTCP and must fulfil the guidelines set by them.
As a buyer, you can ask for the approved CMDA or DTCP number. Typically, the builder will have it on his approved layout drawing. You can request and preserve a copy for yourself. Consult a lawyer if you have any doubts concerning the approvals from the builder. It is best advised to buyers that they must wait for the CMDA approval before deciding and purchasing a house.

Make an informed decision while buying your house!

If you’re a first time home buyer, chances are you may think that the process of buying a house is a stress laden exercise, what with the constant scouring of the newspapers, visits to endless sample flats and above all a nerve racking wait for the final possession. It was always thought that buying a house was a monumental decision, one where families pooled together their resources and bought their dream home; but today it is not so.You can still choose to make your home buying decision a stress-free and peaceful process, provided you have all the information and are fully acquainted with the procedures involved. Let us look at some of the vital things we must consider before giving a nod to any project.

1. Don’t judge a book by its cover

This adage holds true for all home buyers, whether it is your first home or your second. Developers employ the best interior designers and architects to make a gleaming, spacious sample flat at the construction site. They are usually adept at creating impressions that can make the house look bigger than it actually is; some even use lighting fixtures and mirrors to create this appearance. Remember, the beds, dining table sets, sofas and other furniture is usually made in tinier sizes and don’t have much depth; thereby making the floor space look larger.

These are tactics employed to lure gullible customers into believing their homes are going to be spacious palaces. It is better to study beforehand the exact configurations of the house and decide if it meets your requirement.

2. Veiled ‘hidden costs’

Make sure that you make the costing sheet of the flat your bedside companion. Examine every cost factor mentioned in the expense sheet and ensure that you have double-checked the maintenance costs for common amenities such as the pool or clubhouse.

3. Investments in real estate are a sure fire success.

There is no rule book that guides home buyers on money making techniques in realty. Yes, you may refer to ready reckoners or speak to trusted acquaintances but the information will always be second-hand, not your own.Builders and their sales people are likely to say things like ‘prices will be going up next week’ or that ‘there is a sanction which is just around the corner- the property prices are going to go up three-fold’—beware, don’t fall prey to such sales pitches. Use your own judgement and discretion, also consider that impulsive property investments are not the most lucrative option given the current scenario.

4. The walls are leaking; even the sewage is not in place

These kinds of flaws will be discovered only once you have moved into your dream home. First it may be small things such as asymmetrical walls, later it may be the strange smells emanating from the haphazard sewage systems.You will have to live with endless regret that the construction quality is pathetic.
To avoid these kinds of serious blunders, ensure that you have thoroughly checked the builder’s reputation and track record in the real estate market. Avoid unnecessary headaches such as litigations or breaches in purchase contracts—go with a trusted builder. Make sure you have a copy of the municipal sanctioned plan.

5. Unbelievable offers, freebies and discounts

Study the ongoing rates and make a detailed examination of what the typical sizes of homes are in that area. Don’t blindly trust builders offering unbelievable offers such as heavy discounts on per square foot rates or tv sets and vacations to foreign locales. Rather consider it to be flashing red sign, signifying that either the homes are small in size or that his inventory is too large.

6. Check the neighbourhood

Every builder promotes their project by depicting a calm and peaceful surrounding or they may portray the project as being located in a prime location, but is it really so? Imagine living in a house that invites a raucous crowd every night because of the neighbourhood pub or the constant sound of blaring sirens, courtesy the local factory.

7. Even if you want to cancel later, no problem

Falling for this trick is as good as falling into a bottomless pit; it’ll take a long time to get out. Even though the sales person may say the cancellation amount will be refunded easily, you should know the reality is otherwise.Getting a refund from a builder is not easy and there is no rule book with prescribed norms for cancelled bookings. Very often, standalone and small time developers may not return the booking amount at all.Insist on a receipt for the full amount while booking and study the sale agreement very carefully.

8. Pre-Approved loans and tie-ups with banks

There is no doubt that a builder with pre-approved tie-ups with banks and institutions ensures a hassle-free loan process for the buyer. Yet it is safer to check the authenticity of all the documents associated with the project with a legal expert. There have been cases where the developer has backed out on some of his promises and customers have been left out to dry.

9. Possession on time or else…

Builders promise timely possession of the flat or else they will pay you rent, customers can breathe easy, right? The ground reality is that project delays are common and one is left with no choice but to have patience by the cartload. Some developers offer compensations or rent in lieu of the delay, but it’s probably not something you can bet your life on. Penalty clauses come with ‘if’s and buts’ in the agreement or they will have a cap on the amount builders are liable to pay you.The sale agreement should be scrutinised carefully for any such fine print.

10. Legal Woes

Many enthusiastic home buyers end up with inheriting the builder’s problems such as previously unpaid electricity bills, the pool that was in troubled waters because of pending taxes; the list is endless. Imagine the plight of hapless customers who were forced to evacuate from their homes because the entire project was stated illegal.